The opinion of the court was delivered by: Pisano, District Judge
Presently before the Court is Plaintiffs Congoleum Corporation (the "Debtor"), Congoleum Sales, Inc., and Congoleum Fiscal, Inc.'s (collectively the "Debtors") Motion for Reconsideration of the Bankruptcy Court's Order dated January 20, 2009, denying the Debtors' Joint Motion for Leave to File Amended Complaints in the Avoidance Actions in Adversary Proceeding Number 05-6245 pursuant to Federal Rules of Civil Procedure 59(e), 60(b), 52(b), and Local Civil Rule 7.1(i) of the United States District Court for the District of New Jersey. For the reasons stated below, the Debtors' Motion for Reconsideration is granted, the Bankruptcy Court's Order denying the Debtors' Motion to Amend is vacated, and the Debtors' Motion to Amend the above referenced complaint is granted.
In 2005, the Debtors initiated two adversary proceedings in the Bankruptcy Court seeking to avoid approximately 80,000 known asbestos claims (collectively, the "Avoidance Actions"). (Adv. Pro. No. 05-6245; Adv. Pro. No. 05-6461). The first action as filed on December 2, 2005 (the "Omnibus Avoidance Action"). (Adv. Pro. No. 05-6245). On December 30, 2005, the Debtors filed their First Amended Complaint in the Omnibus Avoidance Action naming the Collateral Trustee on behalf of all of the secured claimants for former Class 3, Joseph Rice and Perry Weitz, and approximately 80,000 asbestos claimants who were parties to a Claimant Agreement as defendants. (Docket Entry No. 39). Among the approximately 80,000 named defendants were claimants represented by David C. Thompson, P.C. (the "Thompson Firm") and Boechler, P.C. (the "Boechler Firm"). (Docket Entry No. 39, Exhibits 5 and 10). In the interest of efficiency, the Bankruptcy Court issued an Order Authorizing Notice Procedures for Individual Asbestos Claimants authorizing the Debtors to serve the individual claimants through their bankruptcy counsel. (Docket Entry No. 40). The Thompson and Boechler Firms were served with both the original and the First Amended Complaint; neither firm entered an appearance. (Docket Entry No. 44, Exhibits 6 and 13). When filing their complaints in the Omnibus Avoidance Action, the Debtors inadvertently failed to name fourteen asbestos claimants represented in the bankruptcy case by the Thompson and Boechler Firms (collectively, the "Thompson Claimants").
On December 30, 2005, the Debtors initiated the second adversary proceeding when they filed a sealed complaint to Avoid and Recover Fraudulent Transfers of Property. (Adv. Pro. No. 05-6461). The Thompson and Boechler Firms were not served with the complaint in the second avoidance action; however, the Stipulation and Order regarding the sealed complaint were publicly available. (Docket Entry No. 2).
On December 6, 2006, the Debtors filed their Second Amended Complaint in the Omnibus Avoidance Action adding parties formerly subject to tolling agreements. (05-6245, Docket Entry No. 112). The Debtors filed a Motion for Summary Judgment on April 16, 2007. (Docket Entry No. 122). No opposition was filed by either the Thompson or the Boechler Firms. On August 1, 2007, default judgment was entered against the defendants. (Docket Entry No. 150).
On September 4, 2007, the Debtors filed their Third Amended Complaint in the Omnibus Avoidance Action seeking to rescind the Claimant Agreement, the Pre-Petition Settlement Agreements, the Collateral Trust Agreement, and the Security Agreement. (Docket Entry No. 160). Neither the Thompson nor the Boechler Firms filed an answer to the Third Amended Complaint and default judgment was entered on October 19, 2007. (Docket Entry No. 196).
In August 2008, the Debtors, the Bondholders' Committee, the Asbestos Claimants' Committee, and the Future Claimants' Representative reached an agreement on a plan of reorganization and a settlement of the Avoidance Actions (the "Global Settlement"). The terms of the Global Settlement were filed with the Bankruptcy Court on August 14, 2008. (Docket Entry No. 335). The parties to the Global Settlement also reached an agreement regarding the Avoidance Actions against the approximately 80,000 asbestos claimants who were parties to the Pre-Petition Settlement Agreements and the Claimant Agreement (the "Litigation Settlement Agreement"). The terms of the Litigation Settlement Agreement provided that the parties would be returned to the status quo ante that existed at the time the claimants initially filed claims against the Debtors. On October 14, 2008, the Thompson and Boechler Firms filed an objection to the Litigation Settlement Agreement on behalf of the Thompson Claimants. (Docket Entry No. 342). After a hearing held on October 20, 2008, the Bankruptcy Court approved the Litigation Settlement Agreement. (Docket Entry No. 346). On December 9, 2008, Debtors filed their Joint Motion for Leave to File Amended Complaints in the Avoidance Actions seeking to add the Thompson Claimants as of the date of the original filing pursuant to Federal Rule of Civil Procedure 15(a) and (c). (Docket Entry No. 354).
On January 6, 2009, the bankruptcy judge, in an opinion on the record, denied the Debtors' Motion to Amend reasoning that the Debtors had not met the requirements of Rule 15(c), and that any amendment would be futile because it would not relate back to the original filing date, and therefore, would be time barred. (Docket Entry No. 360). An order denying the motion was entered on January 20, 2009. (Docket Entry No. 362). The Debtors filed a timely Motion for Reconsideration on January 30, 2009. (Docket Entry No. 364). The Thompson Claimants filed their opposition on February 17, 2009. (Docket Entry No. 367). On February 27, 2009, the Bankruptcy Court found the Debtors' proposed Twelfth Amended Plan of Reorganization unconfirmable as a matter of law and dismissed the Debtors' Chapter 11 cases. Debtors appealed the dismissal to this Court and the Motion for Reconsideration presently before the Court was adjourned pending resolution of the appeal. In an Opinion and Order dated August 17, 2009, this Court affirmed in part and denied in part the Bankruptcy Court's Order dismissing the Twelfth Amended Plan, and reversed and vacated the Bankruptcy Court's dismissal of the Debtor's bankruptcy cases. (09-1337, Docket Entry No. 69 and 70). This Court also entered an order withdrawing the reference pursuant to 28 U.S.C. § 157 as to all of the Debtors' Chapter 11 cases. (09-1337, Docket Entry No. 70).
Motions for reconsideration are governed by Local Civil Rule 7.1(i). L. Civ. R. 7.1(i). A district court exercises discretion on the issue of whether to grant a motion for reconsideration.
N. River Ins. Co. v. Cigna Reins. Co., 52 F.3d 1194, 1203 (3d Cir. 1995). A court may grant a motion for reconsideration if the moving party establishes at least one of the following grounds: "(1) an intervening change in controlling law; (2) the availability of new evidence not available previously; or (3) the need to correct clear error of law or prevent manifest injustice." Id. at 1218 (internal quotation and editing marks omitted). The party seeking reconsideration bears a heavy burden and "must show more than a disagreement with the Court's decision." G-69 v. Degnan, 748 F. Supp. 274, 275 (D.N.J. 1990). Further, the moving party's burden requires more than a mere "recapitulation of the cases and arguments considered by the court before rendering its original decision[.]" Id. (internal quotation marks omitted). Therefore, the standard for reconsideration is exacting, and is granted only sparingly. See Thompson v. Lappin, No. 07-2694, 2008 WL 4661614, at *2 (D.N.J. Oct. 20, 2008) (further holding that, "a difference of opinion with the court's decision should be dealt with through the normal appellate process") (citations omitted). It should be noted, however, that ...